KYOTO: US Treasury Secretary Timothy Geithner, meeting with counterparts from around the world this weekend, faces a tough task selling his formula for mending fissures in the global economy as nations seek ways to avoid another downturn. The two-day gathering of finance ministers from the 21-member Asia-Pacific Economic Cooperation, or APEC, kicked off Friday and follows a Group of 20 meeting last month in South Korea, where finance heads and central bankers vowed to avoid using their currencies as trade weapons. They also promised to establish a way to measure the reduction of destabilizing trade gaps, seen through figures such as surpluses and deficits in the current account - a broad indicator of a country's trade and investment. At the heart of the problem is the huge gap between the United States, which buys far more than it sells to the rest of the world, and developing countries, such as China, which are running big trade surpluses. The Obama administration says that China's undervalued currency, the yuan, contributes to strains in the global economy because it gives Beijing an unfair trade boost by making Chinese goods cheaper in the US and elsewhere. Meanwhile, emerging economies like Brazil blame both the US and China for keeping their currencies weak. APEC is comprised of countries that border the Pacific Ocean, including advanced economies such as the US, Japan and Australia and emerging economies such as China, Vietnam and Mexico. Because this weekend's APEC meeting is sandwiched between two G-20 gatherings, it will offer officials another opportunity to figure out how to spark the global economy. Geithner had pushed in a letter to last month's G-20 meeting for a commitment to polices that would reduce current account and trade gaps “below a specified share” of gross domestic product “over the next few years.” Ultimately, however, the G-20 could only agree that progress would be “assessed against indicative guidelines to be agreed,” reflecting the opposition of some export-reliant countries such as Japan. Exactly what those guidelines will be remains a point of contention, and an agreement is unlikely in time for the G-20 leaders summit on Nov. 11-12 in Seoul, South Korea. A senior Treasury official said last week in Washington that Geithner would use APEC to reach out to the eight G-20 members in the group, as well as “a broader group of economies beyond the G-20, many of which have been pursuing export-led growth strategies that have resulted in very large and persistent current account surpluses and significant accumulation of foreign currency reserves.” But Southeast Asia, made up of export-reliant nations, headed into the meeting skeptical of Geithner's original proposal. Thailand's Finance Minister Korn Chatikavanij is expected to submit a statement on behalf of the Association of Southeast Asian Nations, whose members account for a third of APEC. The group “welcomes the constructive suggestions by the United States” and supports policy coordination but focusing purely on the current account would hurt trade, according to a draft of Chatikavanij's statement obtained by The Associated Press. Southeast Asia “has concerns that specific targeting of the current account could lead to measures being employed that may be detrimental to the principal of free trade,” it said.
